New Research Sizes the Problem of First-Party Fraud in the United States and Examines Countermeasures

Boston, MA -- Because first-party fraud, in which borrowers apply for
and use credit with no intent of paying off their loans, has historically been
difficult for credit card issuers to identify as intentional acts of theft,
most lenders end up writing it off as bad debt. Recently, the payment industry
and vendors that serve it have been intensifying efforts to combat first-party
fraud as the criminal underworld exploits vulnerabilities in the banking and
credit card system. Issuers have incorporated fraud prevention technologies to
identify fraud rings and activity, weed out bad accounts, and respond with
greater insight to cases of potential first-party fraud.

Mercator Advisory Group's new report, ‘First-Party Credit Card Fraud: Trends,
Analytics, and Prevention Strategies’, examines first-party fraud by reviewing
current market statistics on credit card fraud from a number of industry
participants and national reporting bodies. The report presents credit quality
data and discusses the type of environment that fosters first-party fraud.

Also included is Mercator Advisory Group's estimate of the scope of the
first-party credit card fraud problem in the United States. The report
describes strategies and vendor solutions and analytical tools for managing
first-party fraud as well as some of the broader market implications
associated with first-party fraud and banks' tactics when dealing with it.

"Part of building a strong case that demonstrates a first-party fraudster's
intent is establishing a pattern of behavior that reveals it, but the best
risk management policy is to cut off a fraudster's opportunity to steal in the
first place," David Fish, Senior Analyst in Mercator Advisory Group's
Fraud, Risk, and Analytics Advisory Service and author of the report,
comments. "As fraud schemes increase in sophistication, it is all the more
imperative for risk managers to harness the power inherent in broader data
sets by applying analytic strategies that can detect correlations between
seemingly unrelated incidents and identify behavior that may be predictive of
fraudulent activity."

Highlights of this report include:

Definition and sizing of first-party credit card fraud in the U.S. market